Morgans picks small cap ASX shares with near-term share price catalysts

About Latest Posts Brendon LauBrendon's passion for shares started by accident in 2003 and he has worked in various roles …

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The market looks caught in a fairly tight trading band since April as bulls and bears look to see who blinks first.

In this climate, a good way to pick ASX shares to buy is to target those with positive near-term catalysts, according to Morgans.

The broker's advise comes as the S&P/ASX 200 Index (Index:^AXJO) bounces between both sides of breakeven today. The index has traded in a less than 200-point band in the past seven weeks.

Target ASX shares with near-term catalysts

Investors are torn between the strong earnings outlook for ASX shares and fears that share prices are primed for a big pullback.

As I reported last week, Morgans believes you should ignore the jitters and use any market weakness as a buying opportunity.

The broker highlighted some ASX 200 shares to buy as it expects them to release positive news in the near-term.

It expects that these good updates will propel their share prices even in the face of a broader market sell-off.

ASX small cap shares that could outperform in the near-term

But there are a number of little known ASX shares that many have overlooked that are also in this basket.

The first is the Kina Securities Ltd (ASX: KSL) share price. The small cap Papua New Guinea broker has around a 60% upside to Morgans' share price target and you may not have to wait long for the Kina Securities share price to surge towards fair value.

"We expect closure of the WBC Asia Pacific acquisition in September to be a material catalyst, forcing the market to reconsider strong earnings growth into FY22," said Morgans.

Dividend restart to light this ASX small cap

Another lesser followed ASX share is the Dalrymple Bay Infrastructure Ltd (ASX: DBI) share price.

Morgans reckons there is a close to 20% upside for the coal export port operator, although ESG conscious investors may shun shares with the "C" word.

But the broker believes that any news of the company restarting its quarterly dividends could light a fire under the Dalrymple Bay share price. This could come as June.

Looking for the X-factor

Those looking for more bang for their buck may want to consider the Micro-X Ltd (ASX: MX1) share price.

The X-ray technology developer that's used for security and medical screening could see its share price surge in the coming weeks or months.

Morgans expects Micro-X to announce that it has secured European regulatory approval for its technology in the current quarter. There is a close to 80% upside for the Micro-X share price to the broker's price target.

Motley Fool contributor Brendon Lau has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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